According to the law firm press release, the complaint charges Regional Management, certain of its officers and directors and the investment banks that underwrote the Offerings with violations of the Securities Act in connection with preparing and utilizing a materially false and misleading Registration Statement and Prospectuses to conduct the Offerings. Regional Management is a subprime consumer finance company, providing various loan products primarily to subprime borrowers with limited access to consumer credit from banks, thrifts, credit card companies, and other traditional lenders.
The complaint alleges that the Registration Statement and Prospectuses used to effectuate the Offerings failed to adequately disclose the Company’s (a) increasing deterioration of underwriting standards, leading to higher percentages of delinquencies and loan charge-offs; (b) failure to adequately reserve for loan losses; and (c) repeated debt refinancing tactics used to increase loan amounts and interest rates, a practice the U.S. Consumer Finance Protection Bureau was then actively investigating and clamping down on. In addition, defendants misstated the Company’s fourth quarter and fiscal 2012 financial reports and failed to report defects in its internal controls. As these unscrupulous tactics and false financial statements came to light, the stock price declined approximately 50% from what the Offerings were priced at just months earlier.
On August 25, 2014, the Court issued an Order appointing lead plaintiff and approving selection of lead counsel. Lead Plaintiffs filed an amended complaint on November 24, 2014. A second amended complaint was filed on February 27, 2015.
This case was ordered dismissed with prejudice on January 27, 2017.